Friday, 06 November 2020 08:42

Apple shareholders get go-ahead for class action over Cook statement Featured

Apple chief executive Tim Cook. Apple chief executive Tim Cook. Courtesy YouTube

Disgruntled shareholders have been given the go-ahead to file a class action against Apple, after its chief executive, Tim Cook, allegedly played down the falling demand for iPhones in China, resulting in huge losses for investors.

According to a ruling by US District Judge Yvonne Gonzalez Rogers, ruled shareholders, headed by a British pension fund, could launch action over a comment made by Cook on 1 November 2018.

Asked during an analyst's call whether Apple was facing pressure over sales in some emerging markets, Cook said, “I would not put China in that category.”

The full query put to Cook was: "Tim, there has been some real deceleration in some of these emerging markets, partly driven by some concerns around some of the rules the administration is contemplating and partly driven by things more specific to China, for instance, like some of the regulations around gaming.

{loadpoisition sam08}"So can you talk about how you see the trajectory there for the business and what you think of the initiatives of some companies like Netflix and Fortnite trying to bypass the App Store around subscriptions?"

Cook replied: "Starting with emerging markets. The emerging markets that we’re seeing pressure in are markets like Turkey, India, Brazil, Russia, these are markets where currencies have weakened over the recent period. In some cases, that resulted in us raising prices, and those markets are not growing the way we would like to see.

"To give you a perspective in – at some detail, our business at India in Q4 was flat. Obviously, we would like to see that be a huge growth. Brazil was down somewhat compared to the previous year. And so I think – or at least the way that I see these is each one of the emerging markets has a bit of a different story.

"And I don't see it as some sort of issue that is common between those for the most part. In relation to China specifically, I would not put China in that category. Our business in China was very strong last quarter. We grew 16%, which we're very happy with. iPhone, in particular, was very strong double-digit growth there. Our other products category was also stronger, in fact, a bit stronger than even the company – overall company number."

The ruling said: "Four days after the call, Nikkei Asian Review reported that Apple cancelled its 'production boost' for the iPhone XR, which indicated a 20-25% reduction in expected sales. Then, on 12 November, Wells Fargo issued a report estimating that Apple had reduced iPhone production by “as much as . . . 30%".

"Finally, on 4 December, Bloomberg published an article reporting that 'in October, about a month after the iPhone XS went on sale and in the days around the launch of the iPhone XR', Apple moved marketing staff to sales, according to an anonymous source. Bloomberg’s source interpreted the action as a 'fire drill' and a 'possible admission that the devices may have been selling below some expectations'."

On 2 January 2019, Apple cut its revenue forecast by up to US$9 billion (A$12.36 billion) which was blamed partly on China's economy due to the effects of the US-China trade stoush.

The lowered forecast was the first for the iPhone since its 2007 launch and Apple's shares fell by 10% the following day.

This year, Apple twice cut its revenue forecasts due to a shortage of iPhones and a drop in sales in China.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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